Some thoughts from a portfolio manager on BNPL and the entry of PP:
https://www.copyright link/markets/equity-markets/why-buy-now-pay-later-s-biggest-competitive-threat-is-not-paypal-20200921-p55xtc

Why buy now, pay later's biggest competitive threat is not PayPal

Luke HousegoReporter

Sep 22, 2020 – 3.51pm

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Liam Donohue is principal and a portfolio manager at Lennox Capital Partners.

Has PayPal's buy now, pay later entry in the US altered your conviction in Sezzle?

Liam Donohue, pictured, and co-founder James Dougherty started Lennox after leaving Macquarie's small companies fund. Janie Barrett

Sezzle is a great business that we have held since IPO, and importantly for us has a great management team and strong ESG principles.

Sezzle is one of the few ASX-listed companies that we know of to have achieved the ‘B Corp’ certification which commits the company to seek positive impact across society, not just for themselves.

Sezzle are also a clear up and coming player in the American buy now, pay later (BNPL) space, which is an emerging payments market. The expected entry of PayPal in one sense is vindication that the market is real and here to stay.

And while there’s no doubt the BNPL space will see competition heat up as more players participate, the key point here is that the main competitor to BNPL is credit cards… and that is a market that still has a huge amount of market share to cede.

Did you look at the Laybuy IPO and any interest in the Zebit IPO?

We always review new businesses when they look to IPO, historically we have only invested in around one in 10 of these deals.

While we did take a look at Laybuy and Zebit we didn’t participate. Our view on the BNPL space overall is that it has been one of the few beneficiaries of the COVID-led environment currently being seen globally.

A phenomenon we often see in the small cap marketplace is that when these emerging industries present themselves, a multitude of businesses of varying quality try to capitalise on that trend. We see our job as sorting the wheat from the chaff on behalf of our investors.